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Levy on carbon emissions is lawful

The European Court of Justice has ruled that the European decision to include in the European ETS carbon emissions generated by non-European aircraft flying to or from Europe is legal.  This type of levy is a border “tax” adjustment of the type I have often discussed on this blog.  It isn’t a discriminatory levy at all since it merely prevents carbon leakages and competitive disadvantage to European carriers who are subject to the tax. This decision is a very good outcome and effectively rebuts the disgraceful hypocrisy of both China and the United States in seeking to escape this levy.  If the levy comes into play then the incentives are for China, the US and other country carriers which fly to China to impose the levy themselves since then they get the revenue not the Europeans.  It is precisely this latter effect that makes me such a strong supporter of border tax adjustments – they provide a mechanism for unilateral measures to become more global and that’s what is needed.

2 comments to Levy on carbon emissions is lawful

  • Ros

    “It is precisely this latter effect that makes me such a strong supporter of border tax adjustments – they provide a mechanism for unilateral measures to become more global and that’s what is needed.”

    Interesting times ahead Harry. A lot that could be said about this unilateral decision of the EU to require the rest of the world to pay for the EU’s supposedly moral attempt to save the world. Unintended consequences aside (e.g. fly into Moscow first etc.) just a couple of newspaper reports that I think suggest the entertaining fight about to start.

    “In October South Africa , China , Brazil , India and Australia signed an agreement in Delhi agreeing to oppose the unilateral imposition of the scheme.”

    As I understand the EU will be charging, whatever the rest of the world is charging their airlines.

    “American airlines, African airlines and other United States-based airlines have already kicked against the carbon dioxide emission tax being imposed on airlines. China’s carriers said they won’t comply with the rules and India signaled it might attempt to scupper the EU plan.
    Lufthansa German Airline had already informed all its passengers to brace up for higher ticket prices as it refuses to shoulder the costs of a carbon trading scheme at the centre of a brewing trade spat.
    The world’s second largest long haul carrier after Dubai’s Emirates said it faced 130 million euros in extra costs this year and became the first major operator to announce possible surcharges since the EU scheme took effect on January 1, 2012.
    Germany’s biggest airline said it would add the costs from the EU’s Emissions Trading Scheme to its existing fuel surcharge, becoming the first carrier to provide details of how it plans to cope with the additional burden.
    China Air Transport Association (CATA) urged Europe to either scrap or delay its initiative to include flights to and from the region’s airports in its emissions trading system as of this year.
    India may ask airlines to withhold emissions data, a Civil Aviation Ministry official said, a move that would undermine the first expansion of the EU carbon cap-and-trade programme beyond its borders.
    The warnings by China and India followed a declaration adopted in November by the United Nations’ International Civil Aviation Organization calling on the EU to exempt international aircraft operators from its curbs on carbon.
    The non-binding ICAO statement was supported by 26 countries, including the U.S., Russia and Japan”

    Africa is panicking, Asia says grow up.

    And then we have the EU’s understanding of how it will play out.

    “However, EU Climate Commissioner Connie Hedegaard welcomed the Dec. 21 ruling, saying the EU now expects U. S. airlines and others to respect EU law.”

  • Ros

    “Minister for environment and forests (MoEF) Jayanthi Natarajan has shot off a letter to European Union Commissioner for Climate and Energy Connie Hedegaard demanding a reversal of the carbon tax on airline emissions.
    The letter has stated that such a unilateral measure “stands not only in violation of the principles and provisions of the international convention, but will also not augur well for the success of future climate change negotiations.”

    “Because it seems to me that if Norway-US (or anywhere in the Americas) is exempt, Oslo is going to see a big boost in airline traffic.”
    Switzerland too.

    Then there is this possible unintended consequence
    “The European airlines are going to face those costs on all of their operations whereas airlines from the Middle East, for instance, won’t. So that does mean that the competitive burden is going to be strongest on the European airlines. That is the main cause for concern,” said Pearce.

    “Emirates, Dubai’s flagship carrier, said the European Union’s (EU) planned carbon emission scheme may cost it as much as $1 billion over 10 years, as it joined other airlines in objecting to the tax.
    About a quarter of Emirates’ global operations are in Europe, said Parker. All will be subject to ETS.
    Airlines around the world have warned of a looming trade war due to the scheme, but the EU says it will not back down. The carriers say their emissions should only be tackled in United Nations bodies, such as the International Civil Aviation Organization (ICAO).
    “We do not feel this scheme represents the best global approach to try and reduce aviation’s impact,” said Parker.
    “Our single biggest concern is that there will be billions raised from the scheme but none of that will go back into research and development, environmental programmes and projects that help aviation.”
    US airlines stepped up their campaign against the EU’s climate policy last month, challenging them in its highest court over the right to regulate their greenhouse gas emissions.
    The Arab Air Carriers Organisation (AACO) recently asked Europe not to include the aviation sector in the ETS scheme.”

    “VAn Etihad spokesperson said: “Etihad Airways remains opposed to this scheme. We consider it to be more an anti-competitive tax on non-European airlines than an attempt to promote environmentally sustainable practice by the aviation industry”

    “What has enraged the Americans, Chinese, Latin Americans – in fact just about everyone – is that the EU imposed a blanket scheme.
    The industry believes that there should be a global solution – backed by the UN aviation body ICAO – not this unilateral go-it-alone policy.
    Now China’s airline industry group has stuck a finger up at the EU and said its airlines won’t pay – and one can assume they would not have taken this step without approval from Beijing.
    U.S. carriers say they will obey the law while their government is talking of taking “appropriate action,” possibly introducing a tax on EU carriers to redress the balance.
    The Europeans were always worried about the U.S. response, but now it seems it’s the Chinese who could cause problems”

    Listened to a academic talking about how the US and China as world powers should cooperate rather than be at each other. Seems the EU has found a way to get them to stand together.
    It might be legal according to the EU. However the rest of the world doesn’t agree that it is legal for the world. The EU has just blown a lot of international political capital. And possibly a lot more than that.

    Aside from the entertainment value of this EU arrogance, what harm have they done to the global challenge of dealing with climate change. Were told by Chinese guides that Obama wanted to deny them equivalent economic rights. Seems that the EU has decided to take over the bad guy role.

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